You obtain beta estimates of General Electric from two different online sources and you are surprised to find that they are so different. Which of the following would not be a correct explanation for the difference?
A)One source used weekly data and another used monthly data.
B)One source used the S&P 500 for a market proxy and the other used the Dow Jones Industrial Average.
C)One used regression analysis and the other used geometric analysis.
D)All of these are correct explanations for the difference.

Question

Quizplus · Accepted Answer

The methods of regression analysis and geometric analysis both estimate beta, so using one or the other would not explain a significant difference in the beta estimates. However, using different time intervals (A) or market proxies (B) could result in different beta estimates. Therefore, only option C would not be a correct explanation for the difference.

You Obtain Beta Estimates of General Electric from Two Different